by Thomas Hammersmith (copyright © 7/1/15 – updated 3/2/19)*
You’re about to get the “inside scoop” on invention developers. Before getting started, you should know about a $36M class-action lawsuit against the largest invention marketer:
Today’s Invention Scam
If you’re an inventor (or have a new idea) – you’ve seen TV commercials and internet ads for “invention developers.” They want to send a free “inventor’s kit” to you and offer a free invention review.
Within a week, you’ll receive promotional materials with examples of success and a Confidentiality Form. Soon, they’ll contact you to explain the urgency of sending in your idea for a free evaluation.
You’ll think, “Why not? It’s free – what do I have to lose?” You’ll feel excited that your idea might be accepted by this company, and it could become a marketable product. With high hopes, you’ll complete the form and mail it back.
Now – it all starts: Phase I:
Next, a salesperson (consultant) will contact you to break the good news: your idea has been accepted by their firm. The salesperson will say: 1) your idea has great potential, 2) the research dept. is excited about it, 3) they’ve never seen anything like it, 4) there’s nothing similar on the market, and 5) you could make a lot of money!
Soon, you’ll receive a contract for $500 – $1500 for “a research report.” These reports are filled with standard language (boilerplate) that describe the various stages for developing any invention.
You’ll also receive a “patent search” which is completely unreliable and performed by non-professionals. These so-called patent searches are quickly gathered from a free, incomplete Patent Office website that’s available to everyone. Meanwhile, the patent lawyer who rubber-stamped your patent search, never even looked at it.
This incomplete patent search will not include patents with any similar features. They’ve purposely been left out. This way, you’ll stay excited about your idea and continue to pay big fees to the invention company. The truth is: your idea could already be patented, but you’ll never know it.
So, this is the heart of the scam: a deceptive patent search gives you false hope. You’ll believe your idea is patentable and marketable. However, nothing could be further from the truth. That’s because existing patents (deleted from your patent search) will stop you from patenting and marketing your idea. Important: an inadequate, misleading patent search crosses the line into defrauding you.
Now, the salesperson will say, “don’t worry about other patents – our company has brilliant engineers, and they’ll design around similar patents.” Don’t believe a word – it’s all part of the scam. The truth is: these invention companies have no engineers, no experts on anything, no legitimate patent lawyers and no real royalty payments.
You’re just dealing with a bunch of hustlers who know how to build-up your hopes and dreams – and grab your money.
After the Report: Phase II
Next, your consultant calls you to review the report. He tells you that the company is excited about your idea and it’s time for the next step. Soon, you’ll receive a contract asking for $5,000 – $20,000. Although it’s a lot of money, you’re all hyped up, and your consultant says that “time is of the essence.”
Now, you’re thinking “wow – my idea will be a great success.” Your consultant might say, “it could be on the market by Christmas, and the royalties will be phenomenal!” You start seeing dollar signs – big money is coming your way.
Your share of “future royalties” is a huge percentage of profits (70% – 90%) – a once in a lifetime opportunity – right? Wrong – any mention of royalties is “the bait” they’re using to reel you in.
They know that “dangling the carrot” of royalties will motivate you to pay them $5,000 – $20,000. Psychologically, they’re playing on your vulnerabilities: 1) you can’t let go of your dream, 2) you don’t want to fail, and 3) you’ve gone this far and can’t stand the thought of someone else marketing your idea and making big $$$!
You’ll be very tempted to pay this huge sum for the company’s services, but PLEASE don’t waste your hard-earned money. Here’s the truth of the matter: their bogus method of promoting inventions is a total con-job. They couldn’t care less about future royalties because their real success rate is zero.
When you send in your payment of $5,000 – $20,000 – they pocket that money and the scam is complete. The invention developer makes all their money from racking-in inventors’ fees – not from marketing inventions.
So, how do they get away with it? Easy – their contracts contain all the required warnings and disclosures. Legally, they’re on solid ground. They comply with all federal statutes and State laws to protect themselves. Believe me – they know this game “inside out – upside down.” In other words, they’re highly skilled at ripping you off legally.
Now – let’s go back for a sec – remember the “successful inventions” they showed you initially? Sorry to say, but those inventions were marketed much differently. They did not become products through the same $10,000 – $20,000 program.
Those “successful” inventions were paid for by the invention developer. They hired a “contract manufacturer” to: 1) establish credibility, 2) overcome skepticism, and 3) impress the public. Anyone can hire this type of manufacturer to make their product.
So, the truth is: their success stories are false, the testimonials aren’t real, and the glowing “business bureau reports” are bought and paid for.
The Hard Sell – The Big $$$
Your consultant will deceive you by saying: 1) the company will promote and eventually, sell your invention, 2) you might receive a huge one-time payment or royalties, and 3) the company will pay all costs for attorneys, etc. when a manufacturer expresses interest.
The problem is – legitimate manufacturers don’t buy or license inventions this way. Please remember: you don’t own the rights to the idea/invention – so, you have nothing to sell.
Even if you have a design patent – no one will buy it (only protects the outer shape). Provisional patents and other inexpensive registrations provide no legal protection and are not substitutes for a utility patent.
Your consultant will dismiss the importance of filing a utility patent because it can easily cost over $10,000. Naturally, your consultant wants to pocket your $10,000 before you pay a patent attorney.
So, how do invention developers stay in business? Many of these firms have been closed down by the Federal Trade Commission. However, new ones keep popping-up who are more clever than their predecessors. As stated, they include mandatory “Warnings to Inventors” that make it difficult to put them out of business.
Here’s how they do it – the salespeople are unbelievably skillful at keeping you hyped up. They’ll flatter you by saying, “the company can’t wait to get started – they see great potential – and there’s a team of professionals ready to go.” But, sometimes, they’ll resort to fear tactics: “If you don’t market this invention now – someone else will – and they’ll cash in and you’ll lose out!”
The truth is – your salesman will say anything to get your money. That’s because they receive huge commissions on your payments. In fact, all day long – your salesman is telling the same lies to other inventors and getting commissions on each one. Somewhere along the line, these salespeople have lost their conscience and any sense of decency.
It’s hard to believe that these “nice consultants” are devious liars. They sound so sincere and authentic, but everything they say is calculated to gain your confidence. They’ll sell anything for a buck. Most read from sales scripts to “hook you in” and answer tough questions. They know how to gain your trust; then, screw you over royally.
The Inside Scoop
No one will tell you the following: most salesman (consultants) sell approx. (8) “research reports” per month at an avg. price of $750 ($6,000). Additionally, they sell approx. (4) “development contracts” per month at an avg. cost of $8,500 ($34,000).
The typical consultant brings in $40,000 each month with an average commission of: 23%. So, your consultant’s monthly paycheck comes to $9,200 (hard to believe, but it’s true; I saw these checks myself – and much bigger ones). So…this explains the relentless calling and endless encouragement – it’s a big payday for your consultant.
It’s interesting to note that most invention marketing companies make over $2 million dollars per year. All profits come from inventors’ fees. That’s because their costs are low, and they don’t employ professionals with the education, experience and ability needed to license inventions. Their services may sound impressive, but they’re nothing but cheap fluff.
The bulk of inventors’ fees go toward advertising, big commissions, fraudulent websites, DVDs (with phony success stories), fighting lawsuits, and refunding money to dissatisfied clients with lawyers.
Naturally, a huge percentage of fees go directly into the pocket of the owner. In fact, one owner paid a fine of $10 million dollars to the FTC, and he’s still in business!
“Experts” with Fake Credentials
Beware of self-proclaimed patent experts without verifiable credentials. They’ll gain your confidence by creating wild stories about their great reputations and extensive knowledge. Meanwhile, they’ve accomplished nothing and must resort to deception.
Their pack of lies include: bragging about qualifications, fighting for inventors’ rights, influencing government officials and speaking at top-notch universities. You’ll be encouraged to make a sizable “donation” to their sham organizations, websites and personal crusades.
Just ask these pranksters to show a track-record of success, and they’ll suddenly disappear.
A Hint for Law Enforcement Officials
There’s a dirty little secret that even the Federal Trade Commission overlooked while conducting their many investigations. The fact is that 70% of the “new ideas” (including yours) have already been submitted to these invention promoters in the past.
Meanwhile, they’ve taken your money and have been lying to you all along. In most cases, the invention promoter simply inserts your name into a previously written report on the same idea. Many people think of the same idea around the same time.
So, the truth is, your “new idea” is probably not “new” to either the invention promoter or The Patent Office. This is the heart of the scam. They’ll say that your idea is “not on the market” and you’ve been given “the green light to proceed,” but this is just another ploy to get your $$$.
They know exactly how to build up your hopes and dreams and then, let you down slowly until the contract expires. Meanwhile, they’ve cashed-in.
Questions to Ask Your Invention Consultant
To verify the allegations made here, simply ask your salesman to answer each question below in writing. There is a 100% guarantee that you’ll never receive any specific, truthful answers:
1) How many of your salesman’s clients have made money from marketing their inventions? (They’ll tell you that this information is confidential). What are the names of the company’s successful inventions and where can you buy one?
2) What are the total number of inventors that have made money with the company vs. the total number of clients that have paid a fee?
3) What are the names of a few successful clients who have made money? Where can they be found on the internet?
4) What happens if the same exact idea has already been patented? What if the same exact idea is already in a “patent-pending” status?
5) How many prototypes has the company built in order to improve the inventions they represent?
6) When the invention company promotes your invention at a trade show – how are your patent rights protected? (They’ll tell you that manufacturers sign confidential agreements that prohibit them from stealing your idea – not true.)
7) Who is the person at the company that has negotiated either license or sale agreements for an invention? What are the qualifications of this individual?
8) Who is the owner of the invention company? What experience does he/she have in selling inventions or obtaining patents? What are the serial numbers of the patents that have become products? Did your invention consultant ever obtain or sell a patent?
9) How many lawsuits have been filed against the invention company for misrepresentations, fraud or wrongdoing? If so, how much money did the invention company pay to settle these claims?
10) Has the invention company changed its name or started a new company over the last 20 years? What were the names of these former companies and were they investigated or prosecuted by State or Federal agencies?
You’ll never receive specific or truthful answers in writing to the questions above. Hopefully, at that point, you’ll forget about working with any fee-based invention-scam.
Question: How can I get my money back if I’ve already paid an invention marketing company?
Call your invention company and ask to speak to someone who can authorize a refund. You’ll be connected to a well-trained employee who will try every trick in the book to keep you happy.
These “client relations” reps will listen politely to your complaints. They’re calm, smooth-talking and extremely shrewd. Their job is to protect the company’s money and avoid issuing refunds.
Just like the salesmen – don’t believe a word they say – they’re speaking to dozens of disgruntled inventors everyday and know exactly how to regain your trust. They’ll skillfully manipulate you, so you don’t file a formal complaint or hire an attorney.
Here are some of their tricks: 1) you’ll be getting “special attention” from now on, 2) extra funds will be spent to market your idea, and 3) extra services will be authorized, etc. These “client relations reps” will renew your hopes and calm you down, but don’t be fooled – they’re just stalling to wear you down over time.
Be determined and persevere: Next, threaten to send a written complaint to: The Federal Trade Commission (FTC), The Attorney General (AG) in your State, the AG in the State where the company is located, your (2) Senators offices, Yelp, RipoffReports.com, Google Reviews and The Better Business Bureau.
Then, you’ll need to write a complaint letter detailing the salesman’s misrepresentations and the company’s fraudulent services. Send a copy of this letter (or email) to the person you’ve been speaking with at the invention company.
Tell them that if you don’t receive a full refund within (10) days – the complaint letter will be sent to all the organizations listed above. Also, advise them that you’re considering contacting a lawyer who is very familiar with the invention business.
At this point, the client’s relations rep will be concerned. She’ll tell you that she doesn’t have the authority to offer a refund and needs to call you back. Then, you’ll receive a phone call, and she’ll try offering you: 1) extra services, 2) a better type of patent, or 3) an extension of your contract.
Tell her – no – only a full refund. Well, now the game begins. She’ll call you back again, but this time she’ll offer a few hundred dollars (if you sign a general release). Tell her – no – only a full refund. A few days later, she’ll increase the refund to approx. one-third to one-half of your total payment. Tell her – no – and this time you should mention that you’re thinking about contacting an investigative journalist on TV.
Remember: just keep saying – no – to every “partial refund offer” and eventually, you should receive all your money back. However, if they’re still being stubborn: 1) send out your complaint letter, 2) contact an attorney, and 3) call an investigative journalists on TV, and 4) write critical reviews on Yelp, Google, BBB and Rip-off Reports. This will keep up the pressure.
The last thing an invention company wants is to be scrutinized by Attorney Generals, the Federal Trade Commission, lawyers or reporters.
The Right Way
1) Hire a registered patent lawyer and pay for a thorough (not preliminary) patent search ($750 – $1500 for most inventions).
2) If your idea is patentable – hire the patent attorney to file a utility patent which will “stop others from making and selling your invention.” If your Idea is not patentable – and if there’s a patent currently in effect (17 years from the date it was granted) – then, move on and invent something else.
However, if the patented invention has not been licensed; you could locate the patent holder (contact info. is on the patent) and ask the inventor if the patent is still available for licensing or marketing. As crazy as it sounds, you might be able to work together with the patent holder and form a joint venture (make sure your patent attorney is involved).
3) If your invention is unpatentable because of an expired patent – then, you can still proceed to develop your invention. Unfortunately, no one will pay you for it because it’s in the public domain. However, if you want to manufacture it yourself and then find distribution outlets (or sell it directly to the public) – you can move forward.
4) Once your utility patent is filed, you should hire an engineering company to build a working model (prototype). An engineer should assist you to improve the product and make sure that it works properly (have the engineer sign an agreement stating that they’re not co-inventors and not entitled to receive any future patent rights or royalties).
5) Go on the internet and seek out the type of companies that are selling similar products and find out which companies are making, distributing or marketing such items. Then, have your patent attorney write a letter to companies that might be interested in seeing your prototype and reviewing your patent-pending documents (they’ll need to sign a confidentiality agreement).
6) If you receive interest from such companies, ask your patent lawyer to follow-up and make an appointment with the interested parties. If any of these companies want to license or buy your future patent rights – let your patent lawyer handle all correspondence and negotiations.
The attorney will advise you about “industry standards” for royalty agreements and typical terms and conditions when a licensing a patent. Give the attorney your input, but listen to the advice being offered to you.
7) Another alternative is for you (or investors) to finance the manufacturing of your idea on a small-scale. You’ll need to locate a “contract manufacturer” who will produce and package the product for you. Then, you can try to sell it directly to distributors or to the public.
If you’re successful in selling-out your initial run; you’ll have a better chance of finding investors to expand your manufacturing capabilities. Such an appeal for venture capital is exemplified on the show “Shark Tank.” You could contact this TV program and ask them if you qualify to demonstrate your product.
Utility Patents vs. Limited forms of Protection
Invention promoters like to file inexpensive “Design Patents” that only protect the outer shape of your idea. More importantly, a Design Patent does not protect the way your invention works. In most cases, it’s a waste of money because designs can be altered easily.
Many invention developers want to file a “Provisional Patent Application” which does not protect the design & function of your invention. This “Provisional” application simply registers your invention at The Patent Office for $130. It gives you one year to file a utility application that protects your legal rights.
Needless to say, the invention developer has no intention of paying for an expensive utility patent that offers legal protection for 17 years.
Only 2% of all patents have made money. However, if you hire an invention promoter – your chances of success are zero. Be smart and perform your own due diligence when hiring any individual or company.
As a precaution – just ask any invention promoter to show you a copy of a real royalty check from a verifiable manufacturer – and after that – you’ll never hear from them again.
This blog has been created for individuals with new ideas who deserve to know the truth about this shady business. So, please listen to this advice. You don’t want to be re-reading this article a year from now and kick yourself for being so gullible.
Finally, beware of so-called “consumer affairs” and “business bureaus” websites who are paid a fee by invention firms to display a fake 5 star review. Also, most invention promoters create their own “complaint boards” (under legit sounding names) and write 5 star reviews for themselves that are nothing but lies.
Don’t be fooled by deceptive Youtube videos that are masterfully designed to create the illusion of successful products and satisfied clients. Also, don’t be impressed by ridiculous inventor trade shows that are just a spectacle to make you believe the company is actively marketing inventions.
Manufacturers don’t license inventions at trade shows. In fact, exposure of your invention at a trade show jeopardizes your patent rights. The bottom line is: whatever an invention marketer brags about is designed to gain your trust, then rip you off.
*Disclaimer and Legal Disclosure
The companies, organizations and individuals listed below have a habit of threatening and suing individuals like me who tell truth about this deceptive industry.
Although my comments are protected by the First Amendment, many of these firms want to protect their yearly profit $2M – $6M dollars. They have plenty of money to spend on lawyers who threaten to silence their critics.
*It is important to note that this article is not singling out any specific firm, individual or organization for wrong-doing. The list below is in the public domain and was obtained from an internet search using the key words: “invention scams.”
7/1/15 © copyright. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.